Study 5 Learning Objectives

Question 1

Explain how federal and provincial and territorial governments exercise controls to safeguard insurer solvency and protect insurance consumers.

Answer 1

• Insurance is regulated at federal and provincial/territorial levels:
  o Solvency
  o Market conduct
  o Insurance affordability/availability
• The federal Insurance Companies Act covers three main areas: o Establishment of an insurance company
  o Prerequisites to operation
  o Supervision during operation
• Provincial and territorial regulators regulate the following:
  o Provincially/territorially licensed insurers
  o The operations of insurance brokers and agents
  o The operations of insurance adjusters
  o Contracts

Question 2

State how each of the following impacts insurance in Canada: Insurance Companies Act, provincial and territorial insurance acts, provincial and territorial highway traffic acts or motor vehicle acts, and any regulations made to accompany an act.

Answer 2

• Multiple pieces of legislation govern insurance in Canada:

1. The Insurance Companies Act for federal licensing and supervision of insurance companies and solvency standards, enforced through the Office of the Superintendent of Financial Institutions
   (OSFI)
2. Provincial and territorial insurance acts for private insurers operating in the jurisdiction, brokers and
   agents, and adjusters
3. Provincial and territorial highway traffic acts for registration and licensing of motor vehicles, licensing of drivers, traffic control of vehicles on highways, and proof of insurance
   - Regulations made to accompany the various acts

Question 3

State the purpose of the Statutory Conditions for accident and sickness, automobile, and fire insurance.

Answer 3

• Statutory Conditions do the following:
  o Establish rights and obligations for insureds and insurers under accident and sickness, automobile,
  and fire insurance contracts.
  o Apply to all in each of the provinces and territories except Quebec.
• General Conditions do the following:
  o Fulfill a similar purpose as Statutory Conditions for insurance contracts in Quebec.
  o Are contained in the Civil Code of Québec

Question 4

Identify the purpose of the Personal Information Protection and Electronic Documents Act and why insureds need protection against their information being used inappropriately.

Answer 4

• Information that clients give brokers is confidential.

• The federal Personal Information Protection and Electronic Documents Act (PIPEDA)
governs the collection and use of personal information.

• The provinces and territories have a mix of privacy legislation that impacts the public and
private sectors in various ways (some are similar to PIPEDA).

• A privacy breach occurs when personal information is collected, used, or disclosed in
violation of applicable privacy legislation.
o Cyber liability insurance may be available to cover a firm’s breach of fiduciary duty to protect
privacy of client information